Ubuntu 12.04 (precise) kernel is 3.2.0.35.40. Too hard to downgrade kermel.
I should mention that I installed current qemu 1.3.0 from source but made no difference. I also had installed 1.3.0 from source on my older ubuntu system (trying to fix a problem which I later solved another way) and it worked fine. So I don't think this is an issue with older/later versions of qemu. Another very odd thing is that about one in 40 attempts the image will boot in kvm. Completely random though it seems. Always boots if I add "-no-kvm". -- Mark Blakeney.
